Biased voluntary disclosure

Einhorn, Eti; Amir, Ziv

doi:10.1007/s11142-011-9177-0

Cited by 59 publications

(30 citation statements)

References 42 publications

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“…Costly state falsification models. In contrast to mandatory disclosure settings, costly reporting distortions have largely been left unexplored in voluntary disclosure settings (with the exception of Korn, 2004;Beyer and Guttman, 2010;Einhorn and Ziv, 2010). 26 Costly state falsification models assume that while disclosures do not have to be truthful, reporting distortions are costly to managers.…”

Section: Non-verifiable Disclosurementioning

confidence: 99%

The financial reporting environment: Review of the recent literature

Beyer

Cohen

Lys

et al. 2010

Journal of Accounting and Economics

1,908

328

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Section: Non-verifiable Disclosurementioning

confidence: 99%

The financial reporting environment: Review of the recent literature

Beyer

Cohen

Lys

et al. 2010

Journal of Accounting and Economics

1,908

328

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“…The capital need theory suggests that more voluntary disclosure enables firms to obtain the funds they need at lower cost (Choi, 1973). In spite of the importance of voluntary disclosure, it is left to the management's discretion (Chen & Jaggi, 2000) and therefore, is influenced by their information-biased selection (Einhorn & Ziv, 2012). Management decides on the type and amount of voluntary information to be disclosed in the firm's annual report (Eng & Mak, 2003).…”

Section: Board Composition and Voluntary Disclosurementioning

confidence: 99%

Board Composition, Firm Characteristics, and Voluntary Disclosure: The Case of Jordanian Firms Listed on the Amman Stock Exchange

Sartawi¹,

Hindawi²,

Bsoul³

et al. 2014

IBR

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This study examines the impact of board composition on the level of voluntary disclosure in the annual reports of listed Jordanian firms. Content analysis is used to collect the required data form the 2012-annual reports of 103 firms listed on the Amman Stock Exchange. Overall, the empirical evidence provided by the study is in line with the agency theory predictions. Furthermore, they have practical implications for firms and regulators in Jordan on the importance of the board of directors and voluntary disclosure as control mechanisms for mitigating the effect of the information asymmetries and agency problems. The study shows a moderate level of voluntary disclosure in the annual reports of Jordanian firms. However, insurance firms tend to disclose more voluntary information than industrial and services firms. Also, the results suggest that Jordanian firms with a high-level of board ownership concentration tend to keep the level of voluntary disclosure low. On the other hand, the presence of foreign directors on the board seems to influence, positively, the level of voluntary disclosure in Jordanian firms. Likewise, the proportion of the old directors on the boards in Jordanian firms is very high and is significantly associated with a higher level of voluntary disclosure.

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“…While the …rm in Fischer and Verrecchia (2000) always discloses, Korn (2004), Kwon, Newman, andZang (2009), andEinhorn andZiv (2012) study settings where a single …rm decides whether to disclose potentially biased information. In these settings, the …rm withholds su¢ ciently bad news and, conditional on disclosure, the market can perfectly back out any bias because it is informed about the …rm's incentives.…”

Section: Introductionmentioning

confidence: 99%

“…Because …rm values are drawn from a …nite interval, a partly separating equilibrium exists for some costs of misreporting where …rms with low …rm values do not disclose, …rms with intermediate values disclose biased reports, and …rms with high values disclose the upper threshold. Einhorn and Ziv (2012) allows for non-linear equilibria and shows that the amount of bias increases in the privately observed information.…”

Section: Introductionmentioning

confidence: 99%

Bias and the Commitment to Disclosure

Heinle

Verrecchia

2016

Management Science

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This paper studies the propensity of firms to commit to disclose information that is subsequently biased, in the presence of other firms also issuing potentially biased information. An important aspect of such an analysis is the fact that firms can choose whether to disclose or withhold information. We show that allowing the number of disclosed reports to be endogenous introduces a countervailing force to some of the empirical predictions from the prior literature. For example, we find that as more firms issue reports or as the correlation across firms' cash flows increases, the firm biases its report less. However, when we treat firms' disclosure choices as endogenous, we show that the number of firms that commit to disclose decreases as the correlation across these cash flows increases, and this, in turn, offsets the direct effect of the correlation on bias. AbstractThis paper studies the propensity of …rms to commit to disclose information that is subsequently biased, in the presence of other …rms also issuing potentially biased information. An important aspect of such an analysis is the fact that …rms can choose whether to disclose or withhold information. We show that allowing the number of disclosed reports to be endogenous introduces a countervailing force to some of the empirical predictions from the prior literature. For example, we …nd that as more …rms issue a report or as the correlation across …rms' cash ‡ows increases, the …rm biases its report less. However, when we treat …rms' disclosure choices as endogenous, we show that the number of …rms that commit to disclose decreases as the correlation across these cash ‡ows increases, and this, in turn, o¤sets the direct e¤ect of the correlation on bias.

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Biased voluntary disclosure

Cited by 59 publications

References 42 publications

The financial reporting environment: Review of the recent literature

The financial reporting environment: Review of the recent literature

Board Composition, Firm Characteristics, and Voluntary Disclosure: The Case of Jordanian Firms Listed on the Amman Stock Exchange

Bias and the Commitment to Disclosure

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